[BETA] Fortnightly

ACCORDING TO ONE RECENT SURVEY, MORE THAN HALF THE U.S. population now lives in states with customer choice. Moreover, industry executives expect 20 to 50 percent of these customers to choose a new electricity supplier by year end. %n1%n

With changes expected in the way electricity is generated, delivered and sold, exerting pressure on prices, what does the future hold for energy storage technologies?

After all, restructuring efforts appear most active in the highest-cost states -- those with average electricity prices running above 7 cents per kilowatt-hour. %n2%n This focus on price should create demand for new technologies, including energy storage. Residential customers show no sign of turning away from telecommuting and home offices, with all the attendant computer-driven equipment. They can be expected to demand premium and convenience services such as power quality and short-term back up. Some customers may request storage to supplement renewable generation, such as photovoltaics and wind power. Industrial customers, striving to increase productivity, will likewise rely more and more on storage systems.

Moreover, storage technologies should see heightened demand as well in wholesale markets. Most of the state restructuring legislation is likely to result in reductions in electricity rates. Achieving those cuts will require diligence and creativity from power producers and marketers. Fundamentally, however, suppliers must reduce the cost of generating and distributing electricity. Consider pumped storage, a mature technology that is playing in competitive markets.

When the National Grid Co. in the United Kingdom sold its two pumped storage plants, Ffestiniog and Dinorwig, in 1995, competition was spirited for those 2,000 megawatts of capacity. The plants were sold to First Hydro, a division of Edison International. The plants are used to provide ancillary services and capacity reserves to the national network, as well as to provide peak power capacity into the power pool.

First Hydro's purchase price exceeded $1,500 per kilowatt, despite the age of the plants. Their strategic value had been recognized as First Hydro has operated the plants profitably for three years. %n3%n

More recently, Oglethorpe Power Corp. has realized the strategic importance of storing electricity as the competitive market unfurls. While the company's 1,800-megawatt pumped storage hydro plant in Rocky Mountain, Ga., was designed for peak power duty, the plant ran every day but one last year to take advantage of strategic power marketing deals. The plant's capacity, and therefore its profitability, already has exceeded its projections of 10 to 11 percent. %n4%n

Three Early Markets

Energy storage can be thought of as any technology that converts and stores electricity to resolve the mismatch between generation and end use. Storage duration can range from microseconds (ultracapacitors, superconducting magnets, flywheels, batteries) to minutes (flywheels and batteries) to hours (batteries, compressed air and pumped hydroelectric storage).

Energy storage can increase the value of electric power by instantaneously correcting for power fluctuations. Such power quality systems can be installed at a customer's large commercial or industrial facility or at the utility substation near customers in need of guaranteed power.

In hospitals and other facilities with critical loads, energy storage is used for power during short